Two people working the exact same job, in the same nation, but differently compensated because of where the live just sounds off to me.
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Cost of living varies dramatically.
If you make $100k in the bay area you can pay rent. If you make that in rural Iowa you are rolling in it.
If you are a company in the bay area you need to pay more to attract employees. When big companies relocate employees from one area to another the regularly adjust compensation.
IMO, taxes should be scaled too. If you have to make 2x the money for the same quality of life, you really have to make way more since that higher money is taxes so much more.
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